World powers weigh emergency meeting on food prices

Leaders want to avoid grain export embargoes that factored 
into global shortages and political instability in 2008.

Leading members of the Group of 20 nations are prepared to trigger an emergency meeting to tackle soaring grain prices caused by the worst U.S. drought in half a century and poor crops from the Black Sea bread basket.

France, the United States and G20 president Mexico will hold a conference call at the end of August to discuss whether an emergency international meeting is required, aiming to avoid a repeat of the 2007-08 food price spike that triggered riots in poorer countries in 2008.

Analysts had little hope of concrete action, although there could be further calls for the United States to change its biofuels policy in response to the crisis while Russia will be encouraged not to impose an export ban.

The United States uses 40 per cent of its corn crop to produce biofuel ethanol, drawing criticism from some groups which argue against the use of food for fuel when hunger is widespread in some poorer countries.

“They might talk about the U.S. ethanol mandate requirements but I don’t see them making any massive responses at the moment. They don’t have a lot of tools at their disposal,” said analyst Muktadir Ur Rahman Of Capital Economics

Benchmark Chicago corn climbed to an all-time high Aug. 10 after the U.S. Department of Agriculture cut its production estimate by 17 per cent, intensifying fears the world is headed for a repeat of the 2008 food price crisis.

The U.N.’s food agency has stepped up the pressure on the U.S. to change its biofuel policies because of the danger of a world food crisis, arguing the importance of growing crops for food over their use for fuel.

The FAO’s food index jumped six per cent in July to higher than in 2008 and the body warned against the kind of export bans, tariffs and buying binges that worsened the price surge four years ago.

Biofuels and food

France, the United States and Mexico will discuss a report on agricultural prices requested by France last month and compiled by the Agricultural Market Information System (AMIS).

This system, created last year under France’s presidency of the G20, is designed to share information on crop prices with a view to averting a repeat of the 2007-08 food crisis.

The forum has no power to impose binding decisions on member states but it is hoped that discussion can discourage countries from taking unilateral action.

Russia banned grain exports for almost a year after a severe drought two years ago and weather problems this year have fuelled speculation it could resort to export curbs again.

A French agriculture ministry official said the call later this month would decide whether to convene the first meeting of the G20’s Rapid Response Forum.

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